Obama Should Mandate Assigned Risk Health Plans

Now that the public option is pretty much dead and buried, how in the world is President Barack Obama and Democrats in Congress going to get coverage for the 47 million or so without health insurance? Why not mandate that each state create an assigned risk plan?

Indeed, this idea could salvage President Obama's dream of reforming health care in our lifetime, without destroying the private insurance market.

This isn't a radical concept. We've already had assigned risk plans for property and casualty insurance coverges, such as auto and homeowners insurance.

The idea would be to pool all those unable to get health insurance through their employers or on their own, and assign those policyholders out according to each private insurer's market share in that particular state. If a carrier writes 40 percent of a particular private health insurance market, they would take 40 percent of the pool, randomly assigned to them.

That way, everyone gets covered without creating a public plan that could underprice and drive all the private carriers out of business.

This idea should be seriously considered because President Obama and those in Congress committed to reform are running out of politically-viable options. Indeed, if they are not careful, their reforms could leave more, not fewer, uninsured.

All President Obama has left in terms of major reforms is to mandate that employers offer coverage and that individuals buy insurance. Without a public option to fall back on, however, mandates could leave more without insurance, while abandoning tens of millions of individuals to the not-so-tender mercies of the “free market,” and possibly bankrupt many with the cost of coverage.

If the penalty charged to those firms that do not offer mandated coverage is too small–say, 8 percent of payroll, which is the number proponents have been tossing around–companies that already pay a higher percentage than that might be tempted to just dump their group plan and pay Uncle Sam the fine.

But if the penalty is any higher, it could bankrupt small businesses and certainly discourage job growth, if not put more people out of work.

This is the paradox of health care reform–every time you try to impose a “solution,” it creates new problems.

One answer might be to mandate individuals to buy coverage, but not impose any penalties on employers. To make sure people have options to buy coverage, Washington could mandate that each state create a Health Insurance Assigned Risk Pool, charging group rates–which are lower than for individuals.

They should also, of course, prohibit exclusion or higher charges for preexisting conditions–two critical elements in standard, employer-based group plans.

If affordability is a problem, there could still be tax deductions for premiums (just like employers enjoy now), and subsidies could be offered as well to help some pay for coverage.

This way, everyone gets covered at an affordable rate, and the private insurance industry not only remains intact, but should prosper with millions of new paying customers.

Of course, Republicans will no doubt decry this idea as “socialism” and a “government takeover” of health insurance once again.

But frankly, if carriers want to avoid creation of a public plan, they had better be willing to take on all those who are currently uninsured. Otherwise their protests would be exposed as self-interested posturing.

What do you folks think?